U.S. carmakers rebound, despite shutdown
- Joann Muller, author of Axios What's Next
2021 Chevrolet Tahoe High Country. Photo: GM
The pandemic threatened to decimate the American auto industry, but Detroit's three carmakers posted better-than-expected financial results for the second quarter, despite two-month factory shutdowns.
The big picture: The industry burned through cash while its factories were shuttered, piling up billions of dollars in losses between them. But they rebounded fairly quickly in June after restarting production while scrambling to restock dealer lots.
- The U.S. consumer played a role, too: While they bought 33% fewer vehicles in the second quarter vs. last year, the pandemic's economic impact could have been worse.
- Despite stay-at-home orders, many consumers embraced new online-ordering processes and took delivery of their new vehicles at home rather than at the dealership.
- Strong demand for highly profitable trucks and SUVs also helped.
By the numbers: Each of the companies outperformed Wall Street expectations.
- GM's adjusted operating loss was $500 million in the second quarter.
- Ford posted an operating loss of $1.9 billion, not counting a $3.5 billion gain on its investment in self-driving tech company, Argo AI.
- Fiat Chrysler Automobiles' adjusted operating loss was $1.1 billion.
- Of note: Tesla posted a $327 million operating profit during the period, but that includes $428 million worth of income from selling regulatory credits to other carmakers.
What to watch: While FCA prepares to merge with France's PSA Groupe and Tesla focuses on expanding production capacity, GM and Ford are gearing up for some of their most anticipated — and profitable — models.
- For GM, these include the redesigned Chevrolet Tahoe and GMC Yukon.
- For Ford, it's the redesigned F-150 pickup, plug-in Mustang Mach-E, and in 2021, the reborn Ford Bronco family of SUVs.